FTSE 100 preview: Index set to pause after US jobs rally

on Mar 7, 2016

The UK benchmark index looks set to kick off the week in negative territory, giving up some of Friday’s gains fuelled by an upbeat US jobs report. In corporate news, Old Mutual (LON:OML) is reportedly finalising break-up plans.

IG’s opening calls suggest that the Footsie will start the day 28 points in the red at 6,171. With few macroeconomic releases this morning, investors are likely to stay on the sidelines despite an upbeat lead from Asia where stocks have surged this morning propped up by the monthly US jobs report and higher commodity prices.
Equities were also in demand in the US on Friday after the nation’s nonfarm payrolls report showed that the world’s biggest economy had created 242,000 jobs last month, topping expectations.

“I think the equity market has basically recovered from the recession fears that were out there and the collapse of oil three or four weeks ago,” John Bredemus, vice president at Allianz Investment Management, told CNBC. “The ramp up we’ve had is more of a relief rally. Things aren’t as bad as they’ve been generally feared.”
At home, the Footsie added 68.97 points on Friday to close 1.13 percent higher at 6,199.43, propped up by the US jobs report, while miners surged on the back of stronger metals prices. Glencore (LON:GLEN) was the biggest blue-chip gainer in percentage terms, closing 11.89 percent higher at 160p.
Macroeconomic releases are in short supply this morning, with Germany factory orders for January due out at 07:00 GMT. While no blue-chip companies are scheduled to post results this morning, financial stocks will stay in focus after a report in The Sunday Times suggested that Old Mutual was finalising secret plans to break itself apart after receiving a takeover approach for its wealth management arm. The American owner of the Chicago Mercantile Exchange meanwhile is thought to be looking to gatecrash the £20-billion merger of the London Stock Exchange (LON:LSE) and rival Deutsche Börse.

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